Surging imports keep tax collection buoyant

Tax  collection continued to remain buoyant supported by increased tariff  from surging imports of goods, according to provisional data of the  National Board of Revenue (NBR).

In January, overall receipts grew  13 per cent year-on-year to Tk 24,349 crore from Tk 20,336 crore during  the same month in fiscal 2020-21.

The increase in collection in  January helped the NBR maintain more than 16 per cent growth in tax  collection in the first seven months of the current fiscal year.

Overall,  taxmen collected Tk 153,438 crore in revenue from July to January of  fiscal 2021-22, up from Tk 132,133 crore the previous year, thanks to  spiralling commodity imports that face customs tariffs.

Bangladesh  paid 54 per cent more import bills in the first half of the ongoing  fiscal year compared to the same period in fiscal 2020-21 with $42.12  billion, according to Bangladesh bank.

The upward trend continued in January as import tariff soared 25 per cent to Tk 7,533 crore from Tk 6,150 crore in January 2021.

"Imports of taxable goods has increased," said a senior official of the NBR.

However,  the collection and growth of value added tax (VAT) and direct tax  mainly on the income of individuals and companies slowed down, making it  tougher for the tax collector to reduce the gap between what can be  achieved and its target.

The NBR lagged behind by Tk 19,183 crore  from its target of Tk 172,621 crore in the July-January period of the  current fiscal year. The latest collection was 46 per cent of the NBR's  annual target of Tk 330,000 crore for fiscal year 2021-22.

This  means the revenue authority will have to collect Tk 176,662 crore in the  remaining five months of the fiscal year. However, this is once again  unlikely happen.

"The NBR revenue target will have to be slashed  like every year," said Towfiqul Islam Khan, senior research fellow of  the Centre for Policy Dialogue (CPD).

The tax administration has  been failing to achieve its target since the 2012-13 fiscal year as the  government has been fixing much higher goals than what the actual  collection rate would allow.

Ahsan H Mansur, executive director of  the Policy Research Institute of Bangladesh (PRI), said the NBR may  collect close to Tk 300,000 crore by the end of the fiscal year  considering the current growth rate.

"I thought collection would  increase a lot because of higher imports this year," he said. "Now it  appears that there will be a Tk 30,000 crore shortfall even though the  collection target has not been increased in several years."

Mansur also said the current growth is likely to continue.

However,  it is riding on the rising commodity prices in both international and  domestic markets, he said while suggesting the government "must consider  a reduction of tariff and tax rates for essential commodities."